On this page…

1. All about tax
2. All about superannuation
3. Managing your money with a budget
4. Buy now, pay later services
4. Renting
5. Medicare & health insurance
6. Concession cards
7. Using MyGov
8. Financial support through Centrelink

 

Around the time you leave school, you may be all of a sudden confronted by a whole range of changes and possibilities.

You might start working, which means you need to think about paying tax and your superannuation (a special savings account that employers must contribute to that you can access way in the future when you retire).

You might be looking to move out of home for the first time, and so need information about renting and your rights.

And you might be looking to get a car, which means organising a learning permit and getting up those driving hours.

This section aims to make sense of some of these aspects of becoming independent.

All about tax

If you have a paid job you may have to pay tax. Tax is money paid to the government so it can provide services like health, education and social security.

Sometimes your employer automatically takes tax payments out of your wages. This is called Pay-as-you-go (PAYG), and you can see evidence of this in your pay slips.

Sometimes your employer won’t take tax out of your pay, particularly if you are employed as a consultant (many jobs in the gig economy like delivering for Uber Eats) work this way. If this is the case you need to sort out and arrange to pay tax yourself.

Unfortunately, everyone with a paid job is expected to pay some tax and will have to get their heads around how it works.

 

What is a tax file number?

Here’s a good place to start.

Your Tax File Number (TFN) is a unique number given to you by the ATO. They use it to identify your tax records. You have to apply for a TFN - you don't get given one automatically.

To apply for a TFN you can:

  • Pick up a form from your local post office

  • Visit an ATO shopfront

  • Apply online

To find out more about getting a TFN, check out the ATO's Tax File Number page.

It's not compulsory to have a TFN, but without it:

  • Your employer has to take 46.5% of your wages in tax.

  • Financial institutions have to tax your interest at 46.5%.

  • Centrelink generally won't pay you an allowance like Youth Allowance, Newstart or Austudy.

  • You won't be able to defer your HECS or HELP fees.

  • Your tax returns or Australian business number (ABN) applications may take longer.

  • It's harder to find out about your financial records from the ATO.

Your TFN is yours for life, even if you change jobs, move interstate or change your name. If you leave the country and come back to Australia later, you still need to use the same TFN.

 
 

TIP: Keep it private! Never share your TFN with friends or provide it over the internet when applying for jobs. Employers will give you a particular form – called a Tax Witholding Declaration – when they need your TFN.

 

Completing a tax return

When you start paying tax, you will likely need to start filling out a tax return at the end of each financial year. This is a way for the Australian Tax Office to check that you are paying the right amount of tax each year.

You can lodge your tax return online via the ATO. You will first need to receive a summary of your pay for the financial year (which runs from July to June), and provide your bank details. Most people fill out their tax return period between July and October each year.

You can also get help filling out your tax return by going through a registered tax practitioner, however this will usually involve a fee.

After you submit your tax return you'll be sent a Notice of Assessment. This is a letter that tells you whether you are receiving a tax refund, or whether you owe the ATO tax. (Hopefully, it’s the former!)

 
 

Receiving a tax refund

If it turns out you're getting a refund, the Notice of Assessment sent out to you will tell you how much you are going to get paid. You usually get paid either within 12 business days (if you lodged your return electronically) or 50 business days (if you did your tax return on paper).

Tax returns are usually paid straight into the bank account your provided details for when you filled out your tax return. However if you haven't provided your bank details you may be sent a cheque in the mail.

 
 

Tax Payments

If it turns out you haven't paid enough tax, your Notice of Assessment will tell you how much more you need to pay, and when you need to pay it by.

You can pay additional tax in a range of ways, including:

  • BPAY

  • Credit card

  • Direct credit

  • Direct debit

  • Cheque

  • Over the counter at Australia Post

If you're having difficulty paying, you can contact the ATO to organise a payment arrangement. You can call them on 13 28 61 between 8am and 6pm Monday to Friday (excepting public holidays).

 
 

Tax help for low income earners

If you're on a low income and are struggling to understand how to work out your tax, the ATO has a Tax Help Program that can put you in touch with trained community volunteers who can provide confidential free assistance.

 
 

All About Superannuation

Superannuation (also known as "super") is money that employers are legally required to put aside on behalf of their employees. When you reach retirement age, you're allowed to access the money paid into any superannuation account in your name.

It may seem a long way away now, but when you retire your superannuation can be an important way of supplementing your age pension.

 

How Does It Work?

If you're eligible for superannuation, every time you get paid your employer pays a set amount of money into a superannuation account in your name. The money is then invested by the managers of the fund into things like shares, property, government bonds and cash deposits. You can only access your super when you reach "preservation age" and retire, or when you turn 65 (even if you haven't retired). There are also some - very limited - circumstances where you can access your super savings early.

 

Who Gets Superannuation?

Nearly everyone with a job is required to join a government-approved superannuation fund. Whether you are full-time, part-time or casual, if you're between 18 and 70 years of age and earning more than $450 in a calendar month your employer should be contributing superannuation on your behalf. If you're paid under an award and earn less than $450 per month, your employer may still be required to pay, but some people are exempt.

The Australian Tax Office's (ATO's) Superannation Basics page has more info about whether you should be receiving super payments from your employer.

 
 

Super for under 18s

Employers have to make contributions for employees who are under 18 if they are working more than 30 hours per week. If you are under 18 and working less than 30 hours a week your employer does not have to make superannuation contributions for you.

 

Personal Contributions

You can also choose to pay extra money out of your wages into your superannuation fund on top of what your employer pays in. Some people choose to do this in order to increase the amount of their super payout when they retire. This is called "making a personal contribution".

It's also possible in some circumstances to pay extra money into your partner's or spouse's super fund. To find out more about personal contributions and how to make them, check out the ATO's Personal super contributions page.

 
 

How much super should I be getting?

If you're eligible for superannuation your employer should be paying at least 10 percent of your ‘ordinary time earnings’. There is a good description of employer super obligations on the Money Smart website.

This amount varies, and sometimes employers do not pay the required amount. You can contact the Australian Taxation Office to let them know that your employer is not fulfilling their responsibilities.

 
 

How Do I Check to see if my employer is paying me enough super?

There are ways to check that your employer is doing the right thing and contributing the correct amount towards your retirement. The ATO has a list of steps you can take to make sure you're getting paid enough super on its Unpaid super from your employer page.

 
 

Can I choose my own super fund?

Depending on what industry you are in, or what employment arrangement you have, you may be able to nominate your own fund.

To find out if you're eligible, and how you can choose your own fund, check out the "Choosing a super fund" information on the ATO's Employees page.

The MoneySmart website also has useful information about things to consider when choosing a super fund.

 
 

Will I lose my super if I change jobs?

It's quite common for people to have worked lots of different jobs for lots of different employers by the time they reach retirement age.

When you change jobs, your new employer might not pay your super into the same fund as your old employer, instead creating all new super accounts with different funds. Any superannuation paid to you by any of your employers is still legally yours.

We recommend that you can combine all of your superannuation funds into a single fund, because each fund attracts fees that eat into your super savings. If you consolidate everything into one super account, it’s going to grow quicker and you will only pay one set of fees.

 
 

NOTE: Superannuation fees come out of your superannuation account: you don’t need to pay anything out of pocket!

While consolidating your super sounds complicated, it’s gotten easier in recent years. Usually, the Super Fund that you want to stick with will help you through the process. You can either look on their website for a ‘find lost super’ option, or call their helpline to get the ball rolling.

Because there are lots of different superannuation funds out there, keeping track of your money as you move from job to job is extremely important. See "How do I keep track of my super?" below for more information.

 
 

How Do I Keep Track Of My Super?

Different employers use different superannuation funds, so keeping track of your money as you move from job to job is extremely important. Any time you change jobs, if you can try to share the details of your existing superannuation account with your new employer.

Having more than one superannuation account means you’re paying more fees, which means less money in your account. You can see how many superannuation funds you have by using the Federal Government's myGov service. By registering for a myGov account and linking it to the ATO, you can access a list of all of your superannuation accounts. When you first connect your ATO details to your myGov account you should have the following handy:

  • Your tax file number (TFN)

  • Your bank account details

  • A notice of assessment from the ATO about your taxable income and tax refund (if any) from the last five years

  • A superannuation member statement from any the last five years

 

Managing Your Money With A Budget

What is a budget?

A budget is a tool for managing your money. A budget allows you to plan out the things you need to pay for and check them against the money you bring in. It may not be fun, but it does help you to make the most of the money you have!

First, let’s start with some basic terminology.

The money you regularly earn (from wages, salary, interest from bank accounts, etc.) is called your income.

The money you regularly spend (rent, food, bills, mobile phone, etc.) are your expenses.

What you're left with once you subtract your expenses from your income is your disposable income - the money you can afford to spend on things you like, or put towards savings.

A budget can help you to save for a something like a holiday, a new laptop, a car, a house or an investment portfolio, precisely because it helps you know how much money is left over from your income after you have paid your expenses.

For example, if you know that you have $100 disposable income after expenses, you can plan to either spend that money on things you want, or save it so that over time you have a lump sum of money to make bigger one-off purchases.

And finally, if you discover your expenses are higher than your income, you probably need to make some changes. A budget helps you identify areas where you can reduce your spending (or perhaps increase your income) in order to avoid going in to debt!

 
 

How do I create a budget?

There are a range of tools out there to help you create a budget. Budget tools generally get you to note down how much money you have coming in, and how much you spend in a range of areas (household expenses, lifestyle expenses, etc.). You can then identify ways to make savings.

If you have a bank account and use online banking, there is a good chance your bank has an online tool you can use, but there are other tools out there. One of the most helpful we have seen is the MoneySmart budget planner, which you can use online or download as an excel spreadsheet:

 
 

Set Realistic Goals

It's important that your budget is realistic. There's no point in aiming to save $200 a week or spend $100 on your phone plan if you don't have enough income to do it. Here are some tips to help you set a realistic budget and stick to it:

  • Don't aim too high with your goals - start with small, achievable ones that keep you motivated

  • Pay your rent and utilities before spending money on anything else

  • Make a list of things that need to be paid for or bought on payday and stick to it

  • Before you buy stuff, shop around and compare prices

  • Allow for unexpected or emergency expenses

  • Ask someone to help you create and stick to your budget

  • Learn to say 'NO' - if you can't afford it, don't buy it

  • Give your budget some flexibility

  • Include some rewards to keep you motivated

Remember that a debt doesn't have to paid back all at once. You can usually make plans with whoever you owe money to so that you can pay it off at a reasonable rate on a regular basis.

 
 

TIP: Budgets sometimes fail because people create unrealistic expectations of themselves. Give yourself a little flexibility to reward yourself!

How Much Money Can I Save?

If you have more money coming in than going out, then you are saving money. A budget shows exactly where your money's coming from and where you're spending it. Your budget may also show you where you might be able to cut your spending and save more.

 
 

Reduce Your Expenses

If you want to save more money, you have to cut back on how much you spend. When you think about your next purchase, consider if it's something you really need or if it's just something you just really want. MoneySmart's Simple Ways to Save Money page has some good advice on saving money and cutting costs.

 
 

Increase Your Income

Another way to save more money is to increase your income somehow. Some ways you could do this include:

  • Taking on extra part-time work

  • Doing some extra study so you can get more skills and apply for a promotion and salary increase

  • Starting your own business

 
 

Why Do Budgets Often Fail?

Budgets often fail because people set unrealistic goals. You don't have to go without all the luxuries in life. In fact, if you want your budget to be successful, make sure you still give yourself the occasional treat. For example:

  • If you take lunch to work, allow some money to buy lunch once a week or once a fortnight.

  • Don't give up going to movies - just go on the cheap nights

Working out the right budget will always take fine tuning. Sometimes you will underestimate what things cost, or have to spend money during emergencies (your car breaks down, you have an expensive tooth problem!).

Budgeting is all about finding the right balance. Once you've got a budget worked out, monitor it for a few months and then revisit it at the end of a year to see if you're on track. If some modifications need to be made (e.g. allowing for more phone expenses), make the adjustments and see how well your revised budget goes.

 
 

Getting Help

If you're in financial trouble you can always talk to a financial counsellor or get some advice from a professional financial planner who can help create a budget that will work for you. Check out the Victorian Government's MoneySmart website for a lot of good advice about managing bills and debt. You can also call the National Debt Helpline’s free counselling service on 1800 149 689.

All content in this budgeting section is adapted from information that originally appeared on the Youth Central website. Courtesy © State of Victoria.

 

Buy Now Pay Later Services

Buy Now Pay Later (BNPL) payment services allow you to delay payment or pay by installments (often fortnightly) over a period of time. They are becoming increasingly popular, particularly as more and more of us buy things online.

But using these services is not without risk. Here we explain how they work, what fees you'll pay and how to avoid getting into financial trouble if you use BNPL services.

 
 

What Is Buy Now Pay Later?

Buy now pay later (BNPL) services are offered by providers such as Afterpay, Brighte, Humm, Klarna, LatitudePay and others.

BNPL services are offered by retailers and service providers so you can buy a product immediately and delay payment. You then pay off the product in installments over several weeks or, with some high-value purchases, over a longer period of time. BNPL isn't only offered for low-value purchases, like clothes and beauty products. Bigger purchases, everything from solar panels to health services, can also be bought using BNPL.

 
 

How Do These Payment Services Work?

BNPL services are offered when you shop online or in-store as another payment option at the time of checkout. You can apply for and set up a purchase plan through the provider's app or website when shopping online. If you're shopping in-store, a shop assistant will set up the buy now pay later application on your behalf.

The BNPL provider will contact you when your application is approved. This is usually a quick process. You will need to provide your bank or credit card details the first time you use these services so your payments can be deducted. You may also be required to pay either a deposit or the first instalment up-front.

 
 

Refunds And Returns

If you have a problem with the product or service you've bought, the shop or service provider's returns policy will apply, so contact them first.

 
 

Are Buy Now Pay Later Services Worth It?

BNPL services are often advertised as 'interest-free' or '0% interest', but the cost will add up if you can't make the repayments on time. Here are some things to look out for before using these services:

  • Late fees - There's usually a late fee every time you miss a payment or pay late. These fees can add up over time.

  • Monthly account-keeping fees - Some of these services charge you a fixed amount for every month you continue to use their service.

  • Payment processing fees - You may be required to pay a fee for each payment, on top of your set repayment.

 
 

Is Your Credit History Or Ability To Repay Checked?

Most buy now pay later providers do not check your ability to make repayments or your credit history. This means you could end up taking on more credit than you can afford and could have trouble making your repayments. This can affect your credit score as some providers report late payments to credit reporting agencies.

 
 

FACT: 1 in 5 BNPL users said they had cut back on or went without basic essentials like food to make repayments on time

- 2020 ASIC report

 

Making A Complaint About Buy Now Pay Later Services

Most BNPL providers have dedicated complaints and hardship services. Contact your provider to discuss your complaint, or if you are having difficulty making repayments.

A free financial counsellor can also help if you're struggling financially. Try the National Debt Hotline on 1800 007 007.

Reproduced with permission from ASIC.